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Once again spring has sprung and another return of the bidding wars article. Just 2 months ago wasn't inventory sitting?
Anyone have info on what is happening out there, and thoughts on the article?
http://www.nytimes.com/2012/04/03/realestate/with-manhattan-real-estate-prices-flat-bidding-wars-emerge.html
Bidding wars sounds so dramatic. Is it happening? In my little world over the last 2 months I would say that 80% of the deals we are submitting bids on end up going to best and final. This is not happening on all property of course circa 2008; but on quality, well priced homes running the gamut from $300k Studios to $5 million dollar town homes in Brooklyn Heights (In the BH scenario after the best and final was concluded and a "winner" determined, the developer voided the results and called for a sealed bid auction where he suggested a minimum bid). First time I saw that happen.
My thoughts? Active seasonal effect combined with too many buyers chasing too few quality listings. Quite frankly it is very active and I have 23 years of experience with NYC markets and 30 years living here.
This is present moment circumstances. I make no warranties for future performance due to effects of diminished wall street salaries, rising oil prices, inflation or (deflationary forces). (;
Keith Burkhardt
The Burkhardt Group
KeithB,
as usual a breath of fresh air. Someone that speaks the truth.
Ctent, you might want to buy Barbara Corcoran's book and read Chapter 19.
Keith is seeing this from the buyer's broker side: seeing it from the other side of the table, I would say these bidding wars are being created by the listing brokers putting properties on the market slightly below where they expect they will clear.
If I have a $1.2 million property, and I price it at $1.3 mm, it might sit; if I put it on at $1.1 mm, I know I have a pretty good shot of getting my seller $1.25 mm.
This is essentially a manipulation of buyer psychology, and the way to be immune to it, as a buyer, is to have a strong sense of pricing (which includes the possibility that what you want might not be at $500/sf) so that you can make the bids that are right for you -- regardless of what the other players are doing.
If I were buying right now, and I were bargain-hunting, I would probably be trying to get sellers of overpriced stale listings to capitulate to market - in other words to reality, not fantasy -- rather than chasing the limited supply of new properties.
ali r.
DG Neary Realty
As someone who has been trying to buy for the past 2-3 months, I agree with the sentiments of the article and Keith. Listings that have no big quirks and are correctly priced are moving very quickly and we've submitted B&F on a few listings. Only one of those ended up above ask, the rest ended up close to ask. On the other hand, it feels like some brokers/sellers have taken this relative strength as an opportunity to jack up listing prices to silly levels. There is just extremely little quality supply out there (at least in the niche I'm looking at).
"This is essentially a manipulation of buyer psychology"
I don't think it's that at all. It's just negotiating 101.
In any negotiation, you are best served if you have many next-best options. When you over-price, you lose this as your potential buyers trickle in. I.e., everyone sees the listing, no one is interested, then after a month you get a nibble but don't have anyone else, then two months later you get another person interested, etc. The entire time, your next-best option is to wait and hope for another buyer down the line.
When you under-price, you get lots of potential buyers all putting in bids at the same time. You know if bidder #3 does not up the bid, you have bidder #2 and #5 as backup. So you tell bidder #3 that they need to come up, because bidder #2 and bidder #5 are there simultaneously. When you over-price, they show up at different times, and you lose your negotiation advantage.
ebabrah: "There is just extremely little quality supply out there (at least in the niche I'm looking at)."
If you increase the price range of your search by 20% with all other criteria being the same, will you still complain about there being 'little quality supply' or just complain about prices being too high?
The former.
ebabrah, in that case, then you need to find a new agent.
Nada, if underpricing to create bidding wars is Negotiation 101, why doesn't it happen in every market?
because of the emotional element. Sellers typically dont underprice because in their minds, "they are not giving the apartment a chance to test a higher level". The logic is flawed as ionada points out. If under priced, the market should step up and there will be multiple interest in the property. This will create that buy side "sense of urgency" that nada mentions is lacking in an overpriced apt. Thats when gap up offers are thrown in. But even this is usually not enough to overpower the ingrained sell side mentality that they test the market at a higher price first, to see if they really can get that perfect buyer
"Nada, if underpricing to create bidding wars is Negotiation 101, why doesn't it happen in every market?"
Other markets as in other RE markets outside Manhattan, or other markets in general? I don't understand what exactly you are asking.
All I am saying is that in any negotiations, it is best to have all interested parties at the table at the same time. In the context of selling RE, having a well-priced ask accomplishes this. In the context of buying RE (or renting), putting simultaneous bids on multiple places accomplishes this.
It's silly to call anything a "bidding war" unless there are at least two bids above asking.
This is an auction not negotiation.
I wouldn't quite call it an auction. Auctions tend to have transparent bidding and either no reserve or a pre-set reserve. Here, the seller has the ability to selectively reveal information / mis-information on competing bids, has no pre-set reserve, and has no obligation to follow through on whatever procedure was declared.
What's your point urbandigs, that Inonada is right? if that's it why not just day so..
hey brooksy...got some brown stuff on your nose there...o
k, Ill just 'day so'. Inonada is right.
And I would tweak Sunday's statement slightly to say "it's silly to call anything a "bidding war" unless there are at least two qualified and acceptable offers submitted in writing submitted to the seller"
If your asking $2M, lets be real here, the seller likely will accept 1.9m or above. If you got 1 strong offer at $1.925m and a 2nd strong offer at $1.95m, the broker can easily create a 'bidding war' by calling for a best n final w/ a stated deadline to submit highest offers. Same situation if these offers are both qualified and acceptable to the seller, even if they are not over ask. Usually in these cases, one of the offers will gap up their bid to get the apt, and go from 1.95, to something over ask. Im seeing these kinds of situations in the field now, but mostly in the sub 1m price range.
urbandigs
7 minutes ago
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hey brooksy...got some brown stuff on your nose there...o
k, Ill just 'day so'. Inonada is right.
And I would tweak Sunday's statement slightly to say "it's silly to call anything a "bidding war" unless there are at least two qualified and acceptable offers submitted in writing submitted to the seller"
If your asking $2M, lets be real here, the seller likely will accept 1.9m or above. If you got 1 strong offer at $1.925m and a 2nd strong offer at $1.95m, the broker can easily create a 'bidding war' by calling for a best n final w/ a stated deadline to submit highest offers. Same situation if these offers are both qualified and acceptable to the seller, even if they are not over ask. Usually in these cases, one of the offers will gap up their bid to get the apt, and go from 1.95, to something over ask. Im seeing these kinds of situations in the field now, but mostly in the sub 1m price range.
board bears are too invested in the "500 p/sq foot or bust" mindset to acknowledge anything other than negative news about the market. these kinds of articles and insight frighten them. they're like red state republicans who still can't figure out how a black guy became president.
you get a gold star! you caught a typo. you insecure useless F#ck
send me an email cunt, so i can meet you somewhere private ok?
Brooks2
5 minutes ago
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you get a gold star! you caught a typo. you insecure useless F#ck
unless of course you are afraid to get your pussy kicked in.
Jim, you back to fighting Brooks? Just days ago you and your ridiculously liberal politics seemed to make you bedfellows.
I just Google caonima Brooks2. Interesting.
gap up? is that like moving up from old navy?
I lovez the lingo of a day trader moving the tools of his trade to sell RE...
A $40k/yr schwab stock broker trying to sell $20MM in munis and interest rate swaps to Inonada.... let me get some popcorn... this I gotta see.
OK, to throw in a wrinkle, let;s say your seller wants to try to chase that higher price, then the inevitable 30 days goes by and you're thinking about a reduction. Do you think it's better to do it in steps, or do you go all the way from overpriced to underpriced in one jump? To me the cosmetics of that arrival (at the new price) are also important. Interested to hear all (ok, most...lol) of your thoughts.
>gap up?
I have to give you that one.
@nada,
sorry for being unclear. I blame opening day. Johan Santana distracted me.
I meant, "why is real estate in Manhattan not like this ALL the time?" If you look longitudinally, underpricing to create bidding wars doesn't happen in every season of every year... So I am implying is that it's a *specific* strategy that listing brokers/sellers are implementing in response to certain market conditions ... so I guess I'm arguing that at the very least it's Negotiation 201 ... and at the most, buyers are being played.
ali
Got it.
I think the dampening of aspirational spirits of sellers over time has allowed lower listing prices. Brokers have lots of incentives to prefer lower listing prices, the question is whether sellers are willing.
We all get pricing to comps, pricing below and above the recent comps...However the realty is, real estate is always worth what someone is willing to pay for it, and the only way to get a bidding war is to have 2 buyers want the same thing at the same time. Of course it helps that they are rich and can keep outbidding each other. I've seen bidding wars since the collapse, and plenty of them, its not a market phenomenon or an indication that the market as a whole is going up, it just happened on those particular properties and they would be considered overpriced by most of your pricing standards, but the demand came in at the same time and the buyers had money to throw around....
I think we would need to see this happening more consistently and across all properties for this to be a sign of a bull market coming back. Also, consider how stats are manipulated, if I bought a property for 1.3, then years later list it at 1.1m, and it sells for 1.2, did real estate really go up 10%?
Fking funny. A Borker using a 'strategy' in this market is a correct descriptions if one believes under-Pricing ONLY helps the Borker by 'gaping' up the time frame to sell in this market.
Never saw under-pricing as a strategy during the bubble yrs. For 100 units that sells 'underpriced', 99.99% never achieves a 'bidding war' or sells above list price => thereby being ' underpriced' to the sellers. The sellers get short changed and borkers get to collect 6% faster in effect doubling their returns.
I think I will use a jamba juice coupon and gap up my consumption of fruit juice.
Angeloz makes a good point about the element of dumb luck involved in these "bidding wars." I don't think anyone could say with a straight face that the listing for this sponsor unit was underpriced:
http://streeteasy.com/nyc/sale/645679-coop-310-west-end-avenue-upper-west-side-new-york
The floor plan is weak, the renovation is nothing special (though splitting the one full bathroom into two was REALLY smart) and there's no history in the building to support the price. The listing happened to hit a sweet spot in the market, with lots of demand and very little supply. So it attracted multiple bids and sold above ask, with the buyers also paying the transfer taxes.
As for the Times article, that particular reporter has always struck me as a particularly pliant industry mouthpiece, even by the standards of the NYT Real Estate section
FLMOAozzzzz... bid bid bid...
"A January report by the Neighborhood Economic Development Advocacy Project in New York found that in the first half of 2011 the number of 90-day pre-foreclosure notices in New York City outnumbered court foreclosure actions by a ratio of 14 to one, indicating that while proceedings were initiated against many homeowners, they were left incomplete."
http://www.cnbc.com/id/46956946
FLMAozzzzz...
def of "financial retards" = even in the face of overwhelming evidence to the bursting of the NYC RE, one buys a manhattan apt....
Please use it in a sentence...
"the financial retards engaged in a bidding war on 310 WEA and actually paid above the listing price... now that is one financial retard."
May I have another
"the borkers that refuse to see the RE bubble for what it is in NYC even if they are highly educated are financially retarded."
Thank you mr. w67.
Here comez the big push by the banks.... laterzzzz.... flmaozzzz... we are spiking down hard from these levels and will spike down again when employment numbers get better... 130K jobs will keep interest rate low for awhile... so first foreclosures... then interest rate spike... two enormous headwinds to NYC RE mkt...
The forecast is clear.. just cause it's sunny this afternoon doesn't mean it'll that way for the entire race.... watch for the wind shifts... anticipate the sails that will be needed... sometimes a double reefed main and a #1 jib wins the race.... but to all the retards with the spinnakers up and a full main going into the storm clouds... get your lifelines on.... FLMAOzzzzzz
w67thstreet
about 4 hours ago
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Here comez the big push by the banks.... laterzzzz.... flmaozzzz... we are spiking down hard from these levels and will spike down again when employment numbers get better... 130K jobs will keep interest rate low for awhile... so first foreclosures... then interest rate spike... two enormous headwinds to NYC RE mkt...
The forecast is clear.. just cause it's sunny this afternoon doesn't mean it'll that way for the entire race.... watch for the wind shifts... anticipate the sails that will be needed... sometimes a double reefed main and a #1 jib wins the race.... but to all the retards with the spinnakers up and a full main going into the storm clouds... get your lifelines on.... FLMAOzzzzzz
bleating like a farm animal about to be shipped to the slaughter house. no clue abouut what has happened before, or what is about to happen, but making a ton of fucking noise nonetheless, and the people in charge in both cases have no clue what the stupid hairy thing is going on and on about.
glad to see you admit you don't have a clue
A January report by the Neighborhood Economic Development Advocacy Project in New York found that in the first half of 2011 the number of 90-day pre-foreclosure notices in New York City outnumbered court foreclosure actions by a ratio of 14 to one, indicating that while proceedings were initiated against many homeowners, they were left incomplete."
worth it to ungray
how about the article today... is buy now or be priced out forever starting to ring true ???
I think Jonathon Miller hit the nail in the head. Buyer enthusiasm will be short lived with Wall street bonuses down.
Also, Spain will be the next Greece, followed By Portudal and Italy. Sell NOW or sell lower later!!!
Jonathan J. Miller, the president of the appraisal firm Miller Samuel, warned that buyer exuberance could be short-lived. With Wall Street bonuses much smaller than in years past, the surge in buying is not likely to last long, he said.
What did Jonathan Miller say three years ago?
Rents are up, and housing demand in good areas has strengthened. Even my prediction of a modest decline this year isn't coming true.
Emotions play such a significant role in RE that there are different ways to incorporate it into a sale. If priced above market and the seller will come down, the buyer will potentially feel like they got a discount of sorts. People like a discount. If the unit is underpriced to stir up bids, the seller is playing on more of the buyers fear of losing and/ or desire to stay at the table like craps. Its sort of like TJMaxx versus the casino poker table. In the end, a rational seller should get market value in either scenario i guess, but the tenor of the times plays a role in whether buyers as a herd are more in the mood for a discount for fear of overspending or more in the mind set of things are heating up and they better act now.
Lots of interesting, thoughtful perspectives on is thread. I like it.
marco_m: Same reporter, same bias. I'm involved in one of the deals mentioned in that piece, and the bidding was not as frenetic as the article suggests. That's partly because the listing agent managed the process extremely well, with a very orderly "best-and-final" immediately after the open house. Still, the feeding-frenzy imagery in that article seems a bit overblown.
Years not over
>Its sort of like TJMaxx versus the casino poker table.
Syms?
>but the tenor of the times plays a role in whether buyers as a herd are more in the mood for a discount for fear of overspending or more in the mind set of things are heating up and they better act now.
They plaid this well and got significant, early traffic.
plaid. ... good one. Sorry, English is my native language. Played.
3 years ago this article would not have existed though. I think at the very least it shows progress which seems to have some legs to it.while comp is clearly down all across wall st., I think much of that has already priced into the market. Now we are also seeing deferred cash from 2008 and 2009 free up as well.
really?
how do you know this?
Too many questions columbiacounty. Try to limit your posts to 1 question at a time.
3 years ago u were getting cash for clunkers
not about who attented an open house
>3 years
But what did Jonathan Miller say three years ago?
He says that current increases are short-lived. So 3 years ago, was he correct?
what supports this insane price level? bidding war? give us a break! those gangsters, ponzi schemers, blood suckers can support the whole RE markets?
Interesting perspective, West81st.
Since my rental will be coming up in a year, I too, took a look this spring to see if I could assuage my pent up demand. I also witnessed some competitive bidding for an apt I was interested in that was priced 30% over 2009/10 comp sales. There apparently were three bids. I deferred for the following reason:
What catalyst do these bidders see in the market for prices to appreciate higher than the inflation adjusted 2007 prices? I am heavily invested in the transformational energy technologies in the US particularly the midwest. There are infinite catalysts and political boons ahead in that industry. Perhaps the inevitable boost this energy boom will provide will eventually boost Manhattan RE several years from now but there are major headwinds before that can happen -- most notably our debt problems which are more likely to hurt RE in the interim. Did anybody listen to Bernanke:
By definition, the unsustainable trajectories of deficits and debt that the CBO outlines cannot actually happen, because creditors would never be willing to lend to a government with debt, relative to national income, that is rising without limit. One way or the other, fiscal adjustments sufficient to stabilize the federal budget must occur at some point. The question is whether these adjustments will take place through a careful and deliberative process that weighs priorities and gives people adequate time to adjust to changes in government programs or tax policies, or whether the needed fiscal adjustments will come as a rapid and painful response to a looming or actual fiscal crisis.
Here is another possible headwind for NY RE: The Bo scandal in China has exposed the rampant corruption that everyone has known about but the govt looked the other way. The Party has now vowed to crack down on corruption -- in particular the vast outflows of money that is being parked in RE and banks outside of China.
It would be interesting to know if RE brokers see an easing of purchases from Chinese buyers in the coming year.
Chinese money has been going overseas for years. The Bo situation will make it flow even faster at least in the short term. If you are in the losing camp in China, wouldnt it make sense to take the money and run before they lock you up or shoot you? Besides China, there is a lot of European money looking for an overseas home with France, Spain, etc all talking about raising taxes on domestic assets and income. Those Manhattan condos look pretty sweet to your cash rich tax dodging european or chinese "businessman".
By the way, everyone knows Street bonuses stunk but that is yesterday's news. The new funny money is with the silicon alley tech startups and media companies. That $1 billion Facebook paid for NYC based instagram should buy a few nice soho lofts or views at the time Warner building. Investment bankers traders are paupers by comparison.
Flmaozz. Agree with you apt23. If you follow the BO situation to its final conclusion, the 'winning' faction will go hard against any ppl that have yuans parked overseas. It's gonna be really really good for nyc re. ;)
In other news the CEO of BofA states the obvious '2nd liens are a total loss when first liens to bad. And when we thought the american public just likes to keep current on their 2nd loan, that was a mistake. We did not realize that they were keeping current on helocs to try and pay the first lien. Ooops. I'm a fking idjiot'
a year and two ago, if you listened to apt23, Europe's problems were going to knock us down. Now, not even a whisper, so on tho China.
don't know about that 4th qrt got crushed with the Greek/euro crisis.. and it's starting to repeat in 2012.
That is funny, Bo situation will be bad for NYC RE? wow, talk about reaching for an argument. How about Khodorkovsky issue in Russia, that really sank NYC RE.
You guys are an embarrassment for bears.
Tommy: If the chinese govt does crack down -- rather than look the other way as they have been doing for year and may do again if the scandal dies down-- I don't think people will be likely to stash money in RE that can be traced through a quick check of public real estate records.
You are correct about incoming tech money - the mayor has been courting those business' for years. But I wouldn't count on the 11 employees in instagram to make us for the pull back in the financial community. As for europeans, they will certainly continue to buy until the euro goes to parity or when Spanish banks tank. The LTRO did nothing to solve any Euro problems. They are all still alive and kicking. And when they kick in, it won't be very good for anyone really.
There are still many headwinds/black swans etc. As I filled my tank today with $4.40 gas for premium, I was rather glad I am playing a conservative hand. My rental is cozy and a block away from an express stop.
yo tambien
The bo situation has zero effect on nyc re but 'bidding wars in nyc' gets a pass.
Flmaozz. Oh pleazeeee making money on a bubble doesn't make you a complete imbecile does it?
i am happy i sold a few months ago now that Bo will crash NYC RE.
>There are still many headwinds/black swans etc.
Apt23 has her own prediction about the black swans?
>i am happy i sold a few months ago now that Bo will crash NYC RE.
According to w67 you are an idiot because you didn't sell in 2007
I was not privy to his wisdom back then but from now on i am a follower. Off i go to dig a bunker. tomorrow I am stocking up with guns and food.
>Off i go to dig a bunker.
Consider renting the bunker.
" According to w67 you are an idiot because you didn't sell in 2007"
100% accurate. if you had real estate to sell that is. signed, someone who did but did not.
lucille, what was the year that w67 bid on a co-op for his family, but only didn't get it because someone bid more?
Bo knows
So with the population boom in Nigeria and sub-saharan Africa, is there a long-term likelihood of immigration to the United States, which would have the impact of creating greater demand for real estate, especially in the U.S.'s gateway cities like New York, thereby countering the effect of the Bo scandal in China? And, since the Chinese investment dollars are flowing to high-end real estate, and the immigrants from sub-saharan Africal are likely to at least initially start out in less expensive apartments, will that diversify the dollar flows and create that rising tide that lifts prices throughout the market?
http://www.nytimes.com/2012/04/15/world/africa/in-nigeria-a-preview-of-an-overcrowded-planet.html
Jbutton when you say "That is funny, Bo situation will be bad for NYC RE? wow, talk about reaching for an argument. How about Khodorkovsky issue in Russia, that really sank NYC RE.
You guys are an embarrassment for bears", you're nailing Apt23. Apt23 habitually says all negative news of any kinds negatively effects NYC real estate; in her mind, reading a a negative article, and then cutting and pasting the gist of it to street easy, and writing something alarming makes her an intelligent and savvy market analyst. It gets especially comical when she doesn't even see the conflicts in her various negative scenarios.
LOL..
"I don't think people will be likely to stash money in RE that can be traced through a quick check of public real estate records. "
Oh yeah, people involved in capital flight never use an investment vehicle, so the chinese state police will have an easy time going through acris, or better yet, signing up for SE, and joining in these discussions.
Apt23, here's a business idea for you - setting up LLCs for Chinese investors who have never heard of such thing. This should be bullish for NYC RE
reallyfunnynow...
reallynow must be me, as well JButton. That's the only explanation for apt23.
bidding wars-augmented reality!
and so it begins..
http://m.cnet.com/Article.rbml?nid=57410443&cid=null&bcid=&bid=-76
J and really: in my original post, i was not making a prediction about the Bo scandal, I merely suggested a possible headwind and said it would be interesting to see if in the next year the brokers noticed a difference in chinese money in NY RE.
If someone had posted a decade ago that Russians would be the major impetus under luxury real estate in America, they would have been ridiculed. Yet it has happened. You have to have an international and political perspective -- and an appropriate time line-- to gage any market.
Far from being negative, I believe the American economy will boom in the next decade but not without some serious slowdowns due to deleveraging. I do not believe the NY RE market will go unscathed because after an unprecedented bubble, there is always a reversion and it has not yet happened. It is therefore wise to look for any and all tipping points that could cause a reversion. If I am wrong and NY RE goes straight up for the next decade without a significant pullback then it will be the first time in the history of real estate -- in the world. Did you ever read Schiller's history -- notably the dutch RE bubble?
Your attempt to stifle all discussion with vitriol and exaggerations is not productive for any productive discourse.
>Your attempt to stifle all discussion with vitriol and exaggerations is not productive for any productive discourse.
Are they acluistic?
NY RE has already had a nasty pull back. people who were buying in 2007 / 2008 are still feeling the pain.
Apt23 that you wrote "exaggerations" are "not productive", is puzzling. If your sky-is-following take on well, everything, is not exageration then what is it?
Reallynow, do you like nazism, communism, child prostitutes, re bubbles, and cheating on SATs to get into Harvard?
Really now, you'd like to go back to 2007?
Why am I even bothering with a nazi? Carry on with your child prostitution ring. Hope you make a lot of money.
to my surprise, many readers here not only know there's a China, but even know there's a Mr. Bo in China
but you guys need to know, the reason Bo got sacked is because he tries to limit corruption and promote a milder capitalism, instead of the current extremism preliminary capitalism in china. that's why the corrupted rich leaders heat him so much.
thus, Bo's lost will encourage much more corruption and green lights for fortune transfer, we'll see more rich chinese buying up NY RE